Touchland’s Internationalization Plan to the US

AUTHORS:
De Sola, Lía
Doenyas, Jojo Yoel
Robles, Mª Victoria
Thamm, Yvonne
ACADEMIC YEAR:
2014-2015
SUPERVISOR:
Tomislav Rimac
KEYWORDS:
Design driven, Hand-sanitizers, Start-up, Innovation, New Market Entry Business Plan.
DATE:
June 17th 2015
Abstract
Touchland is a Spanish enterprise with the ambition to revolutionize the global hand-
sanitizer category. The objective of the company is to achieve sustainable growth by
positioning Touchland as lifestyle reference for the industry. Its two main products:
KUB and KUB2Go are promoted through the brand‟s environmental friendliness and
design image. Issues of imitability will be overcome by this unique value proposition.
Previously, the start-up used a “come-to-me” approach to enter new markets. Numerous
sales representatives and distributors cover already large parts of the globe. In its first
pursue to actively open a market Touchland aims to expand to the US - the biggest,
fastest growing, and most consciousness market for hand-sanitizers. A subsidiary in the
US will increase Touchland‟s brand awareness in the important market. Through the
innovation centered business structure Touchland differentiates itself from the large
number of US competitors.

Keywords: Design driven, Hand-sanitizers, Start-up, Innovation, Market Entry

Business Plan

i
Index

PAGE

1. INTRODUCTION 1

2. TOUCHLAND: COMPANY INTERNAL ANALYSIS 1

2.1 Mission and Vision 1
2.2 Value Proposition 2
2.3 Value Creation 3
2.4 Company Objective and Strategy 4

3. EXTERNAL COUNTRY ANALYSIS UNITED STATES 5

4. FOREIGN MARKET INDUSTRY ANALYSIS 7

4.1 Hand-Sanitizers Industry 8
4.2 Market Competition 8

5. ANALYSIS SUMMARY: THREATS AND CHALLENGES 9

6. ENTRY STRATEGY 10
6.1 Entry Mode Selection 10
6.2 Legal Considerations 12
6.3 Subsidiary: Touchland US 12

7. TOUCHLAND’S OPERATIONAL PLAN IN THE US 13

7.1 Logistics 13
7.1.1 Agreement with Parent Company 14
7.1.2 Logistic Partner 14
7.1.3 Key Performance Indicators 15
7.2 Marketing plan 16
7.2.1 Market Research 16
7.2.2 Evolution of the 4 P‟s 17
7.3 Human Resources 19
7.3.1 Coordinator 20
7.3.2 Sales Representatives 20
7.4 Financial plan 21
7.4.1 Cost Structure 21
7.4.2 Sales Forecast and Financial Statements 21
7.4.3 Taxation 23
7.5 Touchland US’s Operational Plan Timetable 23

8. CONCLUSION 24

REFERENCES 25

APPENDIX 27

ii
BODY GRAPH/TABLE INDEX PAGE
Graph 1: Touchland‟s Value Curve 2
Graph 2: Touchland„s Value Chain 4
Graph 3: Consumption, Investment, Import and Unemployment US 6
Graph 4: Category Positioning 9
Graph 5: SWOT Analysis 10
Table 1: Entry Mode Scorecard 11
Table 2: Scorecard Subsidiary location: Touchland US 13
Graph 6: Touchland US Supply Chain 14
Table 3: Logistic Partner Scorecard 15
Table 4: Key Performance Indicators 16
Graph 7: Evolution of the 4P‟s for the KUB2Go 19
Graph 8: Operational Structure Touchland US 20
Graph 9: Sales Forecast 22
Graph 10: Net Income Forecast 23
Graph 11: Touchland US‟ Operational Plan 24

APPENDIX INDEX
Exhibit 1: Touchland‟s Products 27
Exhibit 2: Health Awareness 27
Exhibit 3: VRIO Analysis 28
Exhibit 4: Innovational Organization‟s Value Chain 29
Exhibit 5: Strategy Diamond Tool 30
Exhibit 6: Exporting Regions of Touchland 30
Exhibit 7: Gross Metropolitan Product of US Metro Areas 31
Exhibit 8: Estimated Income per household per year US (2013) 31
Exhibit 9: Economic Outlook US 32
Exhibit 10: PESTLE Analysis 33
Exhibit 11: Five Forces Analysis 34
Exhibit 12: Touchland‟s Direct Competitors in the US 35
Exhibit 13: Substitutes to Hand Sanitizers, by sales in 2013 37
Exhibit 14: Stakeholder‟s Analysis 37
Exhibit 15: Global Startups in Hand Sanitization: Benchmark 37
Exhibit 16: Scorecard Entry Model: Touchland US 38
Exhibit 17: Trademark Registry US: Touchland 39
Exhibit 18: Logistics Calculations 39
Exhibit 19: Logistic Partner Service Contract 39
Exhibit 20: Focus Group 43
Exhibit 21: Online Survey 44
Exhibit 22: Evolution of the 4P‟s 45
Exhibit 23: Design and Innovation as Positioning Tools 46
Exhibit 24: Cost Structure/Compensation Method Coordinator 46
Exhibit 25: Hofstede‟s Cultural Distance Model Spain/USA 47
Exhibit 26: Cost Structure/Compensation Method Sales Representative 47
Exhibit 27: Historic Exchange Rate Level 48
Exhibit 28: Sales Forecast Variables and Premises 49
Exhibit 29: Input Sheet Variable for Realistic Scenario 50
Exhibit 30: Realistic Scenario Statements 51
Exhibit 31: Optimistic Scenario Statements 55
Exhibit 32: Pessimistic Scenario Statements 59

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1. Introduction
Touchland is a Spanish enterprise in the hand-sanitizer category, founded in 2011. Its two
main products are the KUB and the carry-on KUB2Go (see appendix, exhibit 1). The aim of
the company is to achieve sustainable, quality growth by positioning Touchland as a global
lifestyle reference for the industry.
Main differentiators for the company are the environmental friendly brand image and the
design-driven product. With this approach Touchland connects a conventional health care
product to design and environmental responsibility. Thus, the company targets urban and
professional individuals who have an affinity to aesthetics and to whom environmental issues
are appealing. Touchland‟s main competitive advantage is the devices‟ design, which is
innovative for the product category. However, this competitive advantage is only temporary
as it is easily imitable. A more sustainable competitive advantage is coupled to Touchland‟s
innovation based business model where most of the added value is created in marketing
research. Through the design driven process Touchland will achieve a sustainable market
position.
Moreover, the embedded social responsibility1 at the core of the business is part of the added
value Touchland offers. Responsibility begins in Touchland‟s pursuit of a local production
that manufactures almost all product components in Barcelona. This translates into higher
costs compared to sourcing from Asian suppliers. Parallel to this effort, the company created
a program called Touchlives. 2 It aims to donate 5% of company profits, in form of hand-
sanitizers, to countries with water scarcity where hand hygiene is critical to survive.
The US market has been selected due to the presently high awareness of the product, high
health concerns (see appendix, exhibit 2) and the high potential growth of the market. Based
on average households‟ income the focus is laid on selected urban areas. Consequently,
Touchland‟s targeted customers within the US are white collar professionals for the KUB2Go
as well as companies and hotels for the KUB. As it is the first attempt of the company to
proactively pursue a market, presently only the KUB2Go will be promoted.
The hand-sanitizer industry in the US is composed by a large number of competitors and
substitutes. High market entry barriers are the result. Nonetheless, the market is large and
growing and the company offers highly innovative products with an environmentally friendly
brand association. With a unique value proposition and unconventional marketing Touchland
will exploit the opportunities given and create a niche market in the US in order to succeed.

2. Touchland: Company internal analysis

With its vision and mission Touchland sets the framework for their value proposal. The
unusual design centered approach for hand-sanitizers leads to a unique selling proposition as
well value chain. Value is added in a u-curved model which leads to a salient strategy that
differentiates Touchland from its competitors.

2.1 Mission and Vision

Objectives and goals of Touchland are inscribed in the company‟s mission and vision that
serve as guideline and roadmap for sustainable future growth.

● The company‟s vision “[...] is to position Touchland as a global reference on healthy

environments. Being the pioneers to satisfy a global need.” Further, the B2B business
aspires to provide „a dispenser in every company*

1
Value adding claim of water savings by the use of hand-sanitizers over hand washing
http://www.touchland.es/img/watercounteren.jpg
2
Touchlives Program http://www.touchland.es/es/touchlives.html

1
 ● Accordingly, the mission is to bring “the best sensory experience to companies and
individuals around the world through its innovative & sustainable solutions to hand-
wash:
o Provide healthy and protected environments through hand hygiene.
o Promote a hygiene habit in the daily lives of people.
o To create value and make a difference for those companies that trusts us.”3

The mission and vision of Touchland directly translate into values that intent to guide the
behavior of employees and partners directly: “1.) Passion: Love what we do; being
committed with our mind and heart. 2.) Innovation: Find cutting-edge solutions that improve
the daily life of people, companies and society. 3.) Commitment: To offer an eco-friendly
solution that improves everyone‟s life by creating a healthier and wealthier tomorrow. 4.)
Quality: Continuous search for excellence. And 5.) Leadership: Striving to be a pioneer in
creating a better future.”4

2.2 Value Proposition

Derived from the mission and vision, the unique value proposition is central to the company's
business. Most of the value is created in an initial phase of design thinking, which is an
ideation process focused on solving problems through innovative and groundbreaking
solutions.5 Market demands that Touchland has examined in marketing research are
translated into an innovative design. Inspired by consumer insights, Touchland managed to
pinpoint a global need which was yet unattended: modern and innovative design for hand-
sanitizer products. Next to the utilitarian value proposition an additional emotional value
proposition is formulated: Touchland enables you to create the most incredible memories of
your life without the fear of touching.

Graph 1: Touchland's Value Curve

Source: created by the authors

3
Touchland Documents
4
Touchland Documents
5
Design Thinking theory, retrieved online under:
http://www.ideo.com/images/uploads/thoughts/IDEO_HBR_Design_Thinking.pdf

2
The value proposition is based on appealing aesthetics. First of all, the liquid formula was
improved due to market research results that emphasized the consumers‟ dislike of hand-
sanitizers leaving their hands „sticky‟. As a result of this finding, Touchland removed the gel
factor from the formula. Instead, it developed an alcohol based sanitizing liquid with
powerful hydrating ingredients such as aloe vera. Formula innovation could be assessed as a
major source of competitiveness but Touchland is by no means the only competitor focusing
on formula. Despite Touchland´s hygienic effects being the same as that of other alcohol
based hand-sanitizers, the communication to consumers about this attribute was significantly
reduced. On the other hand, features as scents and colors have been raised as they are visually
appealing and fashionably relevant to consumers. The products offer an improved spray
technique as well, especially the automatic touchless KUB. Another important value that has
been raised is the awareness on water savings due to the usage of hand-sanitizers.
Approximately two liters are saved per usage of the KUB or KUB2Go over regular hand
washing under the tap.6 Essentially, the products are positioned as environmentally friendly
due to its responsibility towards the scarce resource water. However, a look at the value curve
(see graph 1) determines that the main sources of competitiveness are modern and innovative
design (device and packaging) as well as a trendy lifestyle experience. Both values are
currently not being satisfied in the market by any other competitor (as a benchmark in chapter
4.2 will demonstrate). Touchland is not the only company in the hand-sanitizer industry that
is applying its individual knowledge of consumer preferences. Nonetheless, with the unique
emphasis on fashionable design and an environmental friendly lifestyle brand image
Touchland is pushing the boundaries of an innovation-stagnated category. By tackling a need
unattended by competitors, Touchland aspires to open a new customer segment for hand-
sanitizer with its unique value proposition.

2.3 Value Creation

Touchland´s main capabilities in creating the proposed value are intangible and hard to copy:
innovation, flexibility and idealism. Further, three resources could lead into a competitive
advantage as well: the devices‟ design, customization possibilities and the innovative
formula. Through a VRIO analysis (see appendix, exhibit 3) it is evident that especially the
design and the customization offer the opportunity to establish a competitive advantage.
However, Touchland is aware that the advantage is not necessarily durable. Although the
replication of the resources would take some considerable time, imitation of the products
poses a possible threat. To confront itself with the merely temporary competitive advantage
and to remain ahead of competitors, Touchland will focus on maintaining the innovative
design-driven approach. This allows the company to continuously act with a first mover
advantage. Moreover, Touchland‟s strongly communicated brand image aims to overcome
the obstacle of imitation. Placing the company as an environmentally friendly and
fashionable brand in contrast to its competitors, ensures long-term success and a sustainable
competitive advantage. This includes continuously innovating products through a robust
launching calendar. As Touchland is still a young start-up, strong investment into resources is
required to create the needed research and development capabilities. Only if those are
established, the expectations on the innovation calendar can be fulfilled.

6
For reference see http://www.touchland.es/img/watercounteren.jpg and
http://www.touchland.es/en/savings.html

3
Graph 2: Touchland’s Value Chain

Source: created by the authors

A further look at the value chain (see graph 2) demonstrates the unique design-driven,
innovation approach of the start-up. Touchland‟s value chain is exemplary for an innovation
centered organization (for concept reference see appendix, exhibit 4). The first step of idea
creation and selection is focused around marketing research and the identification of
customer needs and preferences. In the next step of concept development the products‟
formula, packaging and device design are prototyped, tested and finally created. Thereafter,
the implementation of the company‟s products takes place. A value proposition and a brand
image are conceptualized in the commercialization period of the product. Developed products
then go into manufacturing. Suppliers deliver raw materials for production of the liquid, the
devices and the packaging to a production plant near Barcelona to which Touchland currently
outsources its production. The production begins with the approved formula and the approved
device and packaging designs. When liquid, devices and packaging are ready, the assembly
process begins and every device is filled with liquid and then packed properly. In the final
stage, after the finished product is stored in Touchland‟s warehouse, the distribution starts.
The products are delivered to distributors and to customers that have placed direct orders
through sales representatives or the online shop. Finally, through marketing and sales a
customer experience is created to attract and interact with end-users. Results from the
generated feedback in this part of the value chain will flow directly into a new step of idea
creation and selection. Therefore, the u-curved value chain, where most of the value is added
in idea creation and selection as well as marketing and sales, becomes a circle of constant
innovation and changing design. Through the implementation of the value chain structure
Touchland aims to continuously repeat the innovation process for future products and thus
creates a sustainable competitive advantage.
However, under everyday operations the stages under the design driven approach (see graph
2) are replaced by a simple market research stage, as products are not innovated on a steady,
daily basis. The value chain then works as a regular u-curve.

2.4 Company Objective and Strategy

Touchland‟s objective, as indicated in its vision, is to operate as a major global player. Its
strategy entails this ambition throughout the entire business. Within the strategy the company
will exploit its sustainable competitive advantages in order to achieve sustainable growth. In
order to achieve congruence across operations an emphasis is laid on quick
internationalization and innovation (see appendix, exhibit 5).

4
Following the economic logic of value pricing, that offers a large gross margin, the product
prices are set according to the created value for customers and not product cost structures. As
Touchland offers a strong emotional value proposition, prices are within the top range of the
category. Hence, coherence is achieved between pricing and intended customer perception as
premium brand. Touchland‟s products can be considered luxury goods in the category. Thus,
they compete in an arena of high priced products, distributed in urban metropolitan areas
across the globe. Innovation and research on consumer preferences for design represents the
core operational area. The company will have to establish itself as innovational organization
in order to maintain the targeted customer segment. Within the market, the elevated design
provokes the premium status that differentiates Touchland from the innovation stagnated
competition in the category. A strong brand image reinforces the superiority of the products
as a reference for a sophisticated and adventurous lifestyle. Brand ambassadors from some of
the currently trendiest sports are fostering this image through viral attention. Eventually, this
will encourage customer loyalty that introduces high switching costs.
The current internationalization strategy is based on direct exporting to several countries and
customers. As Touchland is still a small start-up the main vehicles so far have been purchase
orders placed by a global network of sales representatives and distributors. Touchland has
naturally evolved into a “come to me” internationalization strategy. Essentially, all their
current foreign (non-Spanish) customers and distributors approached Touchland and initiated
the sales relationship on their behalf. Therefore, Touchland has never actively pursued
contacts to sales representatives in any region (see appendix, exhibit 6). The US is the first
market Touchland is pursuing proactively. Due to the size of the market different potential
entry modes are possible and will be discussed later on. Strategic reasoning for the change is
to improve Touchland's product sales within the US. First a few selected urban cities will be
targeted, and then reaching scale by successively broadening the market across the US. Thus,
Touchland is going through different stages of fast pace internationalization and quick global
product penetration.

3. External Country Analysis: United States

As one of the largest markets for hand-sanitizers and the primary driver for the category´s
future growth worldwide7, the US offers the best growth opportunities for Touchland. A
further in-depth analysis of macro environmental factors illustrates the reliability of these
opportunities. Since the US was chosen as target market also based on average earnings in
urban cities, the analysis focuses on the cities with highest income per household as New
York, Chicago and Washington (see appendix, exhibit 7 and exhibit 8).

Considering the political environment in the US, risks are minimal. Currently, the US is a
stable Federal Republic, according to the Worldwide Governance Indicators of 2014. The
government has an effectiveness of 90,91% which indicates high independence from political
pressure, quality of policy formulation and commitment to policies. Furthermore, rule of law
represent a 90,52% and the level of corruption is considerably low with 85,17%. Those
results are much better than for Spain, which suffers from several corruption scandals. Thus,
on aspects of stability, the US offers no threats to the Spanish company but conditions better
than at home. Moreover, benefits could be drawn from trade agreements as the North
American Free Trade Agreement (NAFTA) or potential agreements as the Transatlantic
Trade and Investment Partnership (TTIP), which is still in progress. Especially the later one
facilitates inter-country trade and improves investment possibilities between Spain and the

7
Retrieved online under: http://globenewswire.com/news-release/2015/04/17/725574/10129440/en/Alcohol-
Based-Disinfectants-Market-is-estimated-to-reach-a-total-value-of-US-2-18-billion-by-end-of-2020-
Transparency-Market-Research.html

5
US.
On a more specific industry level, the US Food and Drug Administration (FDA) controls
hand-sanitizer formula and labeling. In terms of consumer safety, the FDA agency tightly
oversees the market in order ensure that products do not pose a threat to consumers. Those
regulations have to be taken into account when entering the US.

On an economic level, the situation again poses little risk but many opportunities. Despite the
aftermaths of the financial crisis, an overall continuous growth in the US market indicates a
positive development (see appendix, exhibit 9). Additionally, consumption in the US has
recovered and even surpasses the average level of OECD countries (high-income economies).
Positive figures for investment and import volume, which are rising over OECD levels, can
be interpreted as positive for Touchland. Unemployment levels have dropped even below the
level of unemployment before the crisis began in 2008 (see also graph 3).

Graph 3: Consumption, Investment, Import and Unemployment US

Source: https://www.compareyourcountry.org/oecd-economic-outlook

Exchange rate variations between the two currencies USD and EUR have been fluctuating,
over the last five years. Since 2014 a sharp trend for a dollar appreciation8 is recorded that
could benefit US revenue reporting to Touchland headquarters in Barcelona (Spain). If the
appreciation continues, partnering with a US producer becomes even less relevant for
European companies as Touchland.
Furthermore, the specific industry develops well. According to a new report from Global
Industry Analysts Inc. 9, the demand for hand-sanitizers is expected to grow from $230
million in 2013 to more than $400 million USD in 2015. From an economical point this can
be evaluated as opportunity for Touchland.

Under social aspects, the prevailing cautiousness about health concerns should be mentioned
as it creates further opportunities. The usage of hand-sanitizers is increasing in various
sectors, e.g. in health care usage of hand-sanitizers is mandatory. As well, the military is
increasing its usage due to the lack of access to hand washing supplies in remote areas.
Finally, sales of hand-sanitizers are highly influenced by the outbreak of infectious diseases

8
Retrieved online under: http://www.xe.com/currencycharts/?from=USD&to=EUR&view=5Y
9
Retrieved online under: http://www.strategyr.com/Hand_Sanitizers_Market_Report.asp, the information was
also included in Touchland‟s official documents.

6
although hand-sanitizer providers are forbidden to make claims on virus extinction. 10

The technological environment11 in the United States offers a strong innovation system with
strong intellectual protection. An overall low expenditure on R&D, as a percentage of GDP,
induces a high dependency on the private sector and strong competition from other countries.
Nevertheless, the pharmaceutical market is rising and innovative technologies are being
developed.

In legal aspects, hand-sanitizers are considered drugs and are regulated by the FDA under the
1994 Tentative Final Monograph (TFM) which determines their safety and efficacy. Here,
hand-sanitizers are classified in the “Antiseptic Hand Washes” or “Healthcare Personnel
Hand Washes” product category. According to this panel, alcohol is identified as the only
active ingredient recognized as “Generally Recognized as Safe and Effective (GRASE)” 12 for
hand-sanitizers containing between 60% to 95% alcohol. Product labeling for hand-sanitizers
is regulated as well. Controlled are the veracity of label claims and specifications on
ingredients, especially active ingredients and their antibacterial effectiveness.

Under environmental considerations, hand-sanitizers are currently not regulated by the US

Environmental Protection Agency. However, FDA and Environmental Protection Agency are
currently researching on a Triclosan threat 13; a component of some antiseptic products that
could raise the resistance to antibiotic bacteria, disrupt hormone levels and contaminate
sewage. Furthermore, there is an inappropriate use of antimicrobial drugs as well as poor
infection prevention and control practices. According to the “Centers for Disease Control and
Prevention” 80% of infections are transmitted through the hands. This could be palliated by
the coordinated action of the World Health Organization (WHO) together with policy makers
and the worldwide health industry.14 An enhanced awareness would in return increase the
demand for hand-sanitizers.
Another environmental concern is the low recycling rate among small thicker plastic bottles
used for hand-sanitizers. Multi-use dispensers eliminate this harmful environmental effect.

Resulting from the PESTLE analysis of the United States it can be emphasized that external
threats are very limited for Touchland‟s expansion. At times conditions in the US seem more
beneficial for Touchland than at home. In conclusion, the US is a promising market for the
internationalization plan (see appendix, exhibit 10).

4. Foreign Market Industry Analysis

Despite the focus on design, Touchland's products clearly belong to the hand-sanitizers
category. Conventionally, the hand-sanitizers‟ health benefits through cleanliness are
communicated within the industry. As Touchland offers a different value proposition its
potential can be assessed through an analysis of the competitors and industry forces.

10
Retrieved online under: http://adage.com/article/cmo-strategy/disinfectants-hand-sanitizers-surge-ebola-
fears/295427/
11
Retrieved online under: www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/invest-in-
the-us-international.pdf
12
Retrieved online under:
http://www.cosmeticsandtoiletries.com/regulatory/region/northamerica/60657047.html
13
Retrieved online under: //www.fda.gov/ForConsumers/ConsumerUpdates/ucm205999.htm
14
Retrieved online under: http://www.who.int/patientsafety/solutions/patientsafety/PS-Solution9.pdf

7
4.1 The Hand-Sanitizers Industry
A five forces analysis demonstrates the medium/high barrier for market entry in the US (see
appendix, exhibit 11), driven by the high level of rivalry among competitors (see appendix,
exhibit 12) and a high threat-level of replacement by substitutes (see appendix, exhibit 13).
In general, the US hand-sanitizer industry is consolidated and experiences high rates of
growth.15 Competition is tough, foremost due to the lack of differentiation among the
numerous hand-sanitizers. Low-cost substitutes like soap and a high attachment to traditional
hand washing methods are another threat that the industry faces. As many companies offer
the same undifferentiated product, the power of buyers is large. Although trends strongly
affect customer purchasing behavior, this is not sufficiently captured by hand-sanitizer
producers in the market. Suppliers‟ power is substantial as well but to a lower extent as raw
materials are easy to source. However, limited transportation and logistics possibilities could
prevent any company from global sourcing and the usage of certain suppliers. In addition,
some of the supplying industries are hard to enter due to high specifications and regulations,
e.g. alcohol production. The threat of new entrants is rather limited, primarily due to industry
requirements as intense capital and knowledge that is time consuming to acquire. Beside the
industry specific stakeholders no other parties influence or compromise the market entry (see
appendix, exhibit 14).
Although high barriers to entry make the industry somewhat unattractive Touchland has a
good chance of succeeding. The value proposition of design differentiation and lifestyle
orientation significantly set the start-up apart from other competitors.

4.2 Market Competition16

The large amount of competitors within the category over saturates the market in the US.
More than fifty companies are selling hand-sanitizers around the world and the majority is
present in the US.17 A benchmark analysis, taking into consideration the top 10 preferred
brands of hand-sanitizers, demonstrates the category trends for the US. Only carry-on hand-
sanitizers are considered as Touchland will primarily focus in the KUB2Go in its entry
strategy. Overall, the strongest communicated attributes by hand-sanitizer brands are hygiene
effectiveness and a large variety of scents. Only two out of the ten brands (“Gold Bond
Ultimate” and “Kirei Kirei”) focus their value proposition on the moisturizing attribute. In
addition, one out of the ten (“Kirei Kirei”) has an emphasis in its environmental impact
regarding the waterless hand cleaning solution their product offers. Prices for a single bottle
of around 50 ml vary around $1,5 to $15 USD. The lower part of the pricing range is
occupied by “Purell” and “GermX” which are the leading and third largest brand in the
market, respectively. In the pricing mid-range the main brands are “PocketBac” from Bath &
Body Works, second according to consumer preferences, “Clorox” and “Gold Bond”. Finally,
“Kirei Kirei”, “Dettol” and “Nexcare” represent the top-pricing range. Most brands target
consumers directly through traditional distribution channels and not industries (food, medical,
dental, cruise ships, etc.). Major distribution channels are convenience stores and
supermarkets as well as pharmacies and online stores. Gel is the most frequently used
application solution for hand-sanitizer devices. However, except for “Kerei Kerei” all of the
top ten brands base their formulas on alcohol as a main ingredient for killing bacteria (see
appendix, exhibit 12).

15
Retrieved online under: http://www.strategyr.com/Hand_Sanitizers_Market_Report.asp, the information was
given through Touchland official documents
16
Competitors analysis has been made only for the KUB2Go as is the product chosen for entering the market in
a first stage. Further explanation in the entry model section of the document.
17
Retrieved online under: http://www.strategyr.com/Hand_Sanitizers_Market_Report.asp, the information was
also included in Touchland‟s official documents.

8
In comparison to competitor products two attributes separate Touchland‟s KUB2Go from the
rest: modern and innovative design and a lifestyle oriented customer experience. Thus, a new
niche to be satisfied was created. The design of the KUB2Go turns the otherwise mere
functionally perceived product into a beautiful accessory. Accompanied by the design
feature, a lifestyle based brand image is created. Thus, a customer experience is offered that
differentiates the KUB2Go from other hand-sanitizers in the market (see graph 4).

Graph 4: Category Positioning

Source: created by the authors

Touchland's unique innovation strategy offers the possibility to explore untapped niches.
Most likely, only another start-up with similar intentions could challenge the company in its
endeavor. However, an online research on active, worldwide operating start-ups and young
enterprises in the market has shown that no other direct competition exists (see appendix,
exhibit 15). None of them shares all the attributes of Touchland‟s KUB2Go and only one has
a design aspect to it. However, as the company has a strong focus on kids as customers it
cannot be considered a direct competitor. Most other start-ups focus on hospital clinics and
health care workers as customer segment. No immediate threat exists for Touchland to
position itself as a reference for design innovation in the category. If success comes as rapidly
as expected, there is a possibility of being targeted for acquisition by big competitors.

5. Analysis Summary: Challenges & Threats

Recapturing the internal analysis of the company, the macro analysis of the US, and the
specific industry analysis the fundamental strengths and weakness as well as opportunities
and threats can be identified (see graph 5).
Weaknesses of a more general kind, that are shared with many other new businesses, are the
position of a market newcomer, not yet established distribution channels and low brand
awareness. More particular, the ease of design imitation poses a weakness. Once other
companies are able to copy the product any advantage connected to the design or other
tangible features gets lost. Additionally, the high price connected to a yet not established
premium brand image could be considered a weakness as customers might not intuitively
understand the product‟s value proposition. Touchland‟s KUB2Go is the first luxury hand-
sanitizer and needs to open that segment for the category. The company‟s strengths build
upon its intangible capabilities: innovation, flexibility and idealism. Being a category pioneer

9
in innovative design has given the company the first mover's advantage and a strong position
in consumers‟ aspirational mind. Innovation is entailed in the organizational structure through
the unique value creation and the start-up‟s characteristics of innovation, flexibility and
idealism. Being prepared to innovate on a constant basis facilitates the company to overcome
the obstacle of imitation and to create a sustainable advantage.

Graph 5: SWOT Analysis

Source: created by the authors

Threats, endangering the operations of Touchland in the US, are foremost related to the
industry. The large amount of competitors makes it difficult to enter the market. Further, a lot
of substitutes to the products of Touchland are available. Following, there might be no need
for the product in the market as it is not a commodity. However, the market is large and
growing which gives Touchland the opportunity to tap those growing markets and especially
new markets. By addressing the new yet uncaptured premium market the closed markets with
high entry barriers can be circumvented.

6. Entry Strategy
As a pioneer in the venture of reinventing the hand-sanitizers category, Touchland‟s main
motivation for entering in the US is to seize the first mover advantage in the biggest market
worldwide. The strategy is to first establish a consumer base with the KUB2Go and
afterwards introduce other Touchland products as the KUB. Given the importance of this
market, Touchland has decided to fully commit to the success of the brand in the country and
not just rely on independent sales agents.

6.1 Entry Mode Selection

In order to decide on an appropriate entry mode for current business expectations the
different option are evaluated in a scorecard model (see table 1). First of all, the initial
investment sum needed is examined. Due to the start-up‟s limited funds available the entry
mode should not require intensive investment. Another criteria is the expected sales to be
achieved with the entry mode. It takes into account the speed of entry and the distribution

10
network that will be used under the entry mode. Further, the percentage of total revenues that
has to be shared with a partner or external entity needs to be taken into consideration. As
Touchland wants to maximize its profits the chosen entry mode should minimize the need for
sharing revenues. Fourthly, the time span in which a positive return on investment can be
achieved is taken into consideration. This point depends on the amount of investment needed
versus the potential sales of the venture. Moreover, the ease of entering the market through
each entry mode is evaluated. Easiness is measured in terms of administrative issues that
have to be sorted and the potential customers reached through the mode. The necessity of
sharing critical information is considered as well. Since Touchland‟s business model is built
on innovation the company aspires to share as little critical information on innovation etc. as
possible. Furthermore, remaining autonomy will be taken into account, as less autonomy
translates into less influencing power for Touchland. Finally, ongoing operating costs are
considered as increased fixed costs should stay in relation to total turnover made (for further
details see appendix, exhibit 16).
Entry modes considered are direct exports through independent sales agents, sales through a
US distributor or logistic partner, direct sales through US warehouses fully-owned by
Touchland, an alliance with a US producer connected to the industry, the creation of a joint
venture with a local company and the possibility of opening a wholly-owned subsidiary with
production in the US.

Table 1: Entry Mode Scorecard

Source: created by the authors

After analyzing the possibilities against the criteria it is evident that entering the US market
through a logistic partner is the optimal option for the company, considering the situation at
hand.
A relatively low investment is needed, given that the facilities are owned and maintained by
the local logistic partner, who is compensated for distribution and warehousing services by
Touchland. The time needed to obtain the expected return on investment is relatively short.
Investment is low and the easiness of entering the market is relatively high, due to the sales
representatives‟ expertise and the logistic partner‟s connections. Moreover, there is no
immediate need to share critical product information with the logistic partner. This is a great
advantage for maintaining market competitiveness over a longer period of time. Touchland‟s
autonomy is kept since the responsibility for the marketing strategy and sales levels remains
with Touchland‟s personnel. Touchland does not target typical distribution channels for hand-
sanitizers but high standard and exclusive channels what makes autonomy important. Finally,
agreeing on a non exclusive contract with the logistic partner allows the company to expand
its network and increase its growth capacity.
Main challenges are the expected sales numbers and the ease of market entry, both of which

11
have better indicators in other entry modes. In order to compensate for these shortcomings a
minimum time of return on investment has to be ensured. Therefore, Touchland‟s salaried
sales agents will right away work on key accounts, beside regular customers. Touchland‟s
sales representatives will have the task to build a customer network and exclusively support
the logistic partner's distribution activities for Touchland products. A coordinator or sales
manager will coordinate and plan the sales agents‟ activities, including organizing, evaluating
and implementing the US sales and marketing strategy for Touchland. In order to guarantee
the functionality a legal entity in the US will be founded.

6.2 Legal Considerations

Options of creating a legal entity would be to either create a company branch or to create a
subsidiary18. The company branch would not be a separate legal entity but would count as
part of the legal parent company. Thus, for all activities of that branch in the US the parent
company in Spain would remain liable. This would pose a limited threat to the parent
company as lawsuits in the US can become very expensive. Moreover, as the branch is part of
the Spanish company, the US income statement would have to be filled for the entire
corporation as the income is considered as part of the full legal entity. Under certain
circumstances this can lead to increased taxation beyond income in the US. Such taxation
claims can arise for instance when the brand name in the US becomes strong and intangible
assets increase. Therefore creating a independent legal subsidiary (from here on called
„Touchland US‟) is the best alternative. Legal accountability remains within the US and
corporate income would be taxed for the subsidiary alone. 19
Registering the subsidiary requires a certificate of incorporation which has to be filed with
the secretary of state‟s office in the state where the subsidiary will be settled. Usually, there is
no limitation on shareholders or minimum capitalization requirements. However, in most
states subscribed capital has to be fully paid before authorized shares are issued. 20
Other legal aspects of selling through the US subsidiary would be trademarks and patents. As
Touchland will build on brand image especially the trademark for the name „Touchland‟ is
important and has been registered by the CEO of Touchland in 2012 (see appendix, exhibit
17) as the company is already having direct sales in the US.

6.3 Subsidiary: Touchland US

Five metropolitan areas which are start-up friendly21 have been taken into account in
assessing the subsidiary‟s location in both coasts of the country (see table 2).
Several variables have been considered such as exclusiveness of location, income level in the
city as the company is targeting a population with medium-high purchasing power and
possible tax benefits that Touchland could receive. Further, the distance to the logistic partner
was considered to ensure a minimum lead time and an excellent customer service. In order to
ensure fast and effective growth, the proximity to the majority of targeted customers was

18
The subsidiary would only be a legal entity and without production unlike the consideration of a production
subsidiary in the scorecard model under 6.1.
19
Ernst & Young LLP (2014): “Step by step, helping you succeed in the US. The inbound guide to US
corporate tax.” Retrieved online under:
http://www.ey.com/Publication/vwLUAssets/EY_US_Inbound_brochure_en/$FILE/EY-US-Inbound-brochure-
en.pdf
20
Ernst & Young LLP (2014): “Step by step, helping you succeed in the US. The inbound guide to US
corporate tax.” Retrieved online under:
http://www.ey.com/Publication/vwLUAssets/EY_US_Inbound_brochure_en/$FILE/EY-US-Inbound-brochure-
en.pdf
21
Retrieved online under: http://venturebeat.com/2012/08/08/top-5-american-cities-for-start-ups/

12
evaluated as well. Finally, other factors relevant for the business segment as unemployment
and education level were analyzed.

Table 2: Scorecard Subsidiary Location

Source: created by the authors

As a result of the scorecard, New York City was selected as site for Touchland US. The
location is very attractive for innovative businesses and most of Touchland's potential
customers are on the East Coast. High income levels speak for the potential of the market in
the city. In addition, many logistic partners are close to the location (as the one selected, see
chapter 7.1.2). On the downside, unemployment is high and education levels comparatively
low. However, this does not inflict the potential market in New York. Only the high tax rates
on businesses are alerting and could crucially reduce revenues.

7. Touchland Operating Plan in the US

For Touchland US to be settled a logistics, marketing, human resources and financial plan
have to be developed. According to the company's strategy those four aspects need to be
integrated into Touchland US‟s business activities over the time period from July 2015 to
June 2016.

7.1 Logistics
As Touchland US will operate the marketing in the US the distribution of the products will be
handled through a logistic partner. Since Touchland US is yet unfamiliar with US distribution
channels a logistic partner will improve performance through lead time and customer
satisfaction. Product shipments from Spain will be stored in the logistic partner‟s warehouses
according to sales forecasts made by Touchland US. Production for the US in Spain will be
scheduled depending on the forecast. Up till the logistic partner a push strategy will be
applied as products will be shipped in containers according to forecasts. Thus, stock keeping
units (SKUs) will not be constant but fluctuate according to shipments. From the logistic
partner onwards a pull strategy is applied according to demand by customers and retailers
(see graph 6). In order to guarantee a constant service quality to end customers through the
logistic partner, Touchland US has to implement special service mechanisms as key
performance indicators.

13
Graph 6: Touchland US Supply Chain

Source: created by the authors

The logistics provider will be included in the supply chain as a substitute for a warehouse as
Touchland US will not be having a warehouse in the chosen entry strategy. Products will be
delivered by the subcontracted manufacturer in Barcelona, Spain, to Touchland‟s warehouse
close to Barcelona. From there the products will be shipped from Port of Barcelona to Port of
Wilmington (North Carolina/United States). Each 40 foot container can hold approximately
560.000 units (for calculation see appendix, exhibit 18). The transportation of each container
costs around $4.500USD. Using our 2016 sales forecast (388.056 units) which is explained in
depth in the financial section, one container of (388.056 units) will be shipped to the US . The
products will be sold on DDP (Delivery Duty Paid) incoterms by Touchland HQ to
Touchland US and the products should directly be shipped to the logistic partner‟s
warehouse. Taxes, duties and transportation until the US will be paid by Touchland HQ and
truck shipment within the US will be dealt by Touchland HQ as well. A fixed fee for the
usage of the warehouse and distribution should be agreed upon depending on the possible
product shipment each year. An exclusivity contract will not be offered to the logistic partner
and the duration of the contract would be limited to one year with automatic extension if not
suspended by any party (for further details refer to the contract draft in appendix, exhibit 19).
The time limitation on the contract is given for Touchland to be able to change partners
easily. Future sales development can require changes in the company‟s logistic structure that
could eventually not be handled by the chosen logistic partner. After the establishment of
Touchland US has led to stable and sustainable growth, Touchland US might consider selling
without a partner or selling through other channels. Thus, at this stage a long-term contract
with a logistic partner should be avoided.

7.1.1 Agreement with Parent Company

As the products are bought from the parent company in Spain and resold in the US
purchasing conditions have to be set. Touchland US will buy at a price of $3,6 USD per unit
from Spain. This includes DDP delivery to the warehouse of the logistic partner in US.
Invoices will be issued in USD$ in order to eliminates exchange rate risks for the subsidiary.

7.1.2 Logistic Partner

An in depth online research on logistic companies‟ offered services, business structure and
logistics network has shown that Hopkins, Barrett and ATC International could be potential

14
logistic partners. All three companies offer services necessary to satisfy Touchland US‟s
demands on logistics within the US. However, in the end much of the success depends on
Key Performance Indicators (KPIs). A further scorecard evaluating the most relevant aspects
of each of these companies was made to choose the best alternative (see table 3).

Table 3: Logistic Partner Scorecard

Source: created by the authors22

The analysis determined that Barrett distribution is the best option for the internationalization
plan as they have several locations within the country. Barrett‟s headquarter is in
Massachusetts and the warehouses are located in Massachusetts, New Jersey, California,
Virginia, Maryland and Tennessee. Through the warehouse network easy and fast access to
the target markets could be ensured, considering its vast size of the US. Guaranteeing on time
product delivery to retailers is an important factor in establishing sales relationships. Further,
Barrett already handles product similar to the ones Touchland offers. Chances of appropriate
handling are higher as well as chances for pre-existing channels to retailers. Although all
three logistic companies provide the necessary services, Barrett's additional services could be
beneficial for Touchland. These additional services include KPI‟s analysis and customer
satisfaction initiatives, related to logistics process. Finally, the trustworthiness assessed
through references is amongst the highest for Barrett. Outsourcing logistics to Barrett will
help to decrease warehouse and distribution costs for Touchland. As Touchland US‟s office
will be located in New York, due to customer potential in that region, the New Jersey
warehouse could be used as main warehouse and lead time would be kept low for a large
target market. Lead time for the customers in the west coast will not be affected either due to
the warehouses located in the other regions.

7.1.3 Key Performance Indicators

The main reason for Touchland US to work with a logistic partner is to improve the service
level and speed of entry. Customer satisfaction is important and the customer should receive
the products on time with short lead times and in excellent conditions. Beside several
warehouses Barrett has the service capacity to fulfil KPI requirements. Offers as the KPI
analysis allow Touchland US‟s coordinator to monitor the partner better. The actual KPIs
would be design conjointly with Barrett (for a draft see table 4). They should serve as a
guideline included in the contract to measure the logistic partner‟s performance and settle
complaint number, product damages, etc.

22
Costs are unspecified as inquiries by the authors to the companies have not been answered.

15
Table 4: Key Performance Indicators

Source: created by the authors

7.2 Marketing plan

Touchland's KUB2Go, which will be primarily offered in the US, targets consumers highly
aware and attracted by product aesthetics and environmental impact. Main targeted segment
are urban and white collar professionals who are able to connect the everyday-products to a
premium design and are responsive to the message of water savings. Market research outlines
the possibilities of the premium segment. Ultimately, Touchland wants to reach households
with the emotional value proposition: Touchland enables you to create the most incredible
memories of your life without the fear of touching. In order to transfer the emotional message
a new marketing mix is applied.

7.2.1 Marketing Research

Previous marketing research by Touchland in Barcelona has shown that there is an existing
segment for the product. To transfer the product strategy upon the US market some efforts
have been made to assess information on the targeted customers and their preferences
regarding hand-sanitizers. The conducted results from a focus group (see appendix, exhibit
20) and an online survey (see appendix, exhibit 21) overlapped as expected. Overall, citizens
of large cities are more inclined to follow trends and to use hand-sanitizers with higher
frequency. Still, they do not consider hand-sanitizers as a substitute for traditional hand
washing because they only partially rely on the product‟s effectiveness. In terms of pricing,
the willingness to pay an above category average price (1-3 $US) could not be tracked even
in participants caring about design. Within the marketing research tools used, the targeted
segment could not be further specified.
It is important to take into consideration that the participants had no visualization of the
design product. Features of the KUB2Go are new to the category segment (as shown in the
benchmarking) and made the association difficult. For participants to imagine the new added
value by the design hand-sanitizer was beyond the possibilities of the online survey. A
connection between added value and premium value pricing could not be made. In order to
overcome this problem and to examine consumers‟ motivation, actual preferences, and price
points a conjoint analysis needs to be made. Through this statistical technique the
participants‟ estimation of the proposed values by the KUB2Go could be determined.
Although similar information is collected through surveys, in a conjoint analysis questions of
preferences are placed through visual examples of products that show different product

16
features within a category. Due to the complexity and length of this process Touchland US‟s
market research was subject to a limitation. Nevertheless, the basic interest in design and the
higher trend orientation in large cities were confirmed.

7.2.2 Evolution of the 4P’s

Touchland is a start-up that was born in a new market environment and whose brand has
developed naturally under conditions that give consumers a higher power over purchasing
decisions. New technology replaced strong TV campaigns and has given consumer increased
access to information. Thus, consumers tend to be more demanding as they can choose
products they use from a holistic point of view. Today, the experience a product brings is
almost more important than the functionality. Prices according to value perceived are the rule
in strategic pricing. Touchpoints between brand and consumer are shaped by the invention of
social media and promotion is more about creating a community that follows and supports the
brand than to give monetary benefit to buyers. Given the highly competitive environment and
the aversion to high pricing as identified in the survey, a bold and innovative marketing
strategy is needed (see graph 7). Yearly marketing expenses will be planned with a budget of
13% of revenues. For the unique value proposition the company needs to take an
unconventional marketing approach using the 4E‟s model (see appendix, exhibit 22). In this
way, Touchland US will compete with multinationals that dominate the hand-sanitizer market
with low prices.

Product → Experience
Touchland products aim to provide an extraordinary experience. It targets a specific need of
hand-sanitization in the specific target group of young urban professionals. Since competitive
advantages are subject to frequent change, as it is the case for Touchland, constant innovation
is only the first step of generating ever new experiences. Innovations from the Headquarters
in Spain, funded by the premium pricing strategy, will maintain the KUB2Go‟s competitive
advantage in the US market. However, the sense of belonging to the selected customer group
is the unique experience customers receive. Social media makes it possible for consumer to
interact with the brand and to present themselves with the product as innovative and stylish.

Place → Everyplace
For Touchland the digital landscape is the preferred marketing tool. Digital channels
represent the company‟s most valuable asset to make their message heard. The webpage of
the company has been design to specially convey the image of the brand. It helps the user to
understand the company‟s value proposition and its differentiation from any other competitor.
Additionally, the brand is present in several social media platforms such as Facebook,
Instagram and Google+. Online shops will be a natural selling point. In terms of physical
shops, Touchland aims to be where its target segment is. Thus, the company will avoid
traditional channels of the category, such as supermarkets and drugstores. It will built on a
strong presence in fashion retailers, fitness gyms and pet stores that relate to the brand‟s
essence. Therefore, management of key accounts is essential for achieving the placement
strategy.

Price → Exchange
Additional to the convenience the product offers to keep your hands clean it serves as a
fashion accessory that represents a desirable lifestyle characterized by simplicity,
friendliness, and modernity. The customer purchases the innovative and stylish aspects of the
KUB2Go.In line with this positioning value pricing is induced, which is a strategy that
focuses on setting the price according to the customers‟ perceived value of the product. This

17
high range pricing will be supported by the modern and innovative design of the device (see
appendix, exhibit 23) and by the lifestyle branding established by the holistic marketing plan.
Throughout time, the price will remain stable given that the initial entry price is going to be
on the top range of the category. Further, prices of premium items should not be increased by
small degrees. This speaks in favor of price stability. In order for this strategy to be
successful, the lifestyle branding needs to be strong, given that the target group is price
sensitive towards this category. As revealed in the survey price sensitivity exists, which is
probably created through the lack of added value this type of products traditionally has.

Promotion → Evangelism
As premium products are new within the category, Touchland needs to create add value to its
products in order to encourage purchases at a high price. Additionally, high switching costs
for consumers should be induced through brand loyalty. The online survey revealed that the
majority of the respondents are likely to purchase a product to follow a trend they perceive or
even consider themselves trendsetters. Celebrity and influencer‟s endorsements can open the
window for Touchland‟s entry strategy to consumers‟ minds. Touchland will reach out to
celebrities and influencers that are coherent with the band‟s lifestyle and very active on social
media in order for them to openly endorse the KUB2Go. The majority of celebrity and
influencer endorsements can be achieved by sending out free product trials. If the product is
well perceived by the respective person, they usually are glad to endorse it with pictures over
their social media channels. Moreover, Touchland can emphasize the environmental aspects
of its products as well as the Touchlives program which donates 5% of revenues. The social
aspects should increase the willingness to endorse Touchland‟s products. Celebrities will be
contacted through model agencies and media houses that have an active relationship with
them (e.g. Taylor Swift, Kanye West, Kardashian sisters, Cesar Millán and Chaning Tatum).
Alongside its ambassadors, Touchland would use traditional promotion as billboards in key
places of the targeted metropolitan areas as well constant communication through Google and
Facebook ads. Within stores, Touchland plans to have large over the counter (OTC) spaces in
order to produce appealing and disruptive OTC vehicles. Regular discounts for bulk-
purchasing will be available.

18
Graph 7: Evolution of the 4P’s for the KUB2Go

Source: created by the authors

7.3 Human Resources

In order to establish the network of distributors a strategic human resources solution needs to
be defined. For Touchland US to reach its desired sales goal human resources are crucial. The
subsidiary will be registered under the name of the CEO of Touchland. An employer
certification number (EIN) will be purchased to begin hiring people. 23 One person (from
hereon called “coordinator”) will be send from Touchland headquarters to be in charge of
handling the orders and deliveries in the US as well as developing a customer portfolio with
especial attention to key accounts as well as designing and running the marketing activities.
The coordinator will be placed in the US subsidiary. Two sales representatives in the US will
work as salaried sales agents that will be engaged in developing the contacts to distributors
and serve as a direct contact for the retailers (see graph 8). Beside the salaries, Touchland will
have to pay for workers compensation insurance according to the regulament in the State of
New York.24

23
Retrieved online under: http://www.tax.ny.gov/bus/doingbus/hire.htm
24
Retrieved online under: http://www.wcb.ny.gov/index.jsp

19
Graph 8: Operational Structure Touchland US

Source: created by the authors based on information from Touchland

7.3.1 Coordinator
The position requiring the most business acumen is that of the sales area coordinator who is
in charge of starting operations in the new market. Tasks would include the handling of
orders at headquarters, keeping contact to the sales representatives and distributors, ensuring
that the service guidelines are kept, and coordinating marketing activities for the US market.
Eventually, the coordinator would be required to travel between Spain and the US. Main
characteristics asked of the coordinator would be:
● Knowledgeable professional from within the company.
● High communication and leadership skills.
● Culture sensitive person, able to fast adaptation to different environments.
● Work well under pressure and uncertainty.
● Professional English level and experience abroad.
Creating this position would ease the operations Touchland US significantly. On time orders
and service quality strongly increase the relationship to distributors and would increase sales
in the long term. Costs arising from this created position would thus be nullified by the return
on the investment (see appendix, exhibit 24).

7.3.2 Sales Representatives

The sales representatives will be locally recruited in the US and are responsible for
supporting the third party distributor with the sales of Touchland‟s products to retailers and
consumers. In the initial phase the main tasks for the one or two sales representatives will be
the establishment of a distributor network, representation of Touchland US on trade fairs and
similar events and reporting to the US coordinator. Main characteristics required from the
sales representatives are:
● Experienced salesperson, with partial marketing skills.
● High communication and networking skills.
● US citizen willing to travel 50% of the time nationally.
● Easily adaptable and open to new business approaches.
● Work well under pressure and uncertainty.
Without locally present sales representatives the establishment of a distributor network would
be tremendously more difficult and sales of Touchland US would be directly affected. The
cultural distance between Spain and the US would make it essential to have culturally aware

20
people on those positions (see appendix, exhibit 25). Hiring at least one sales representative
will be essential for Touchland‟s success in the US and costs arising should be covered by
sales (see appendix, exhibit 26).

7.4 Financial plan

In order to assess the evolution and the financial needs of Touchland US the financial
statements have been forecasted and analyzed. The forecasted financial plan includes three
different scenarios: optimistic, realistic and pessimistic. A distinction between the scenarios
was made according to the price at which Touchland US would be able to sell the product to
the retailer.
The Financial Plan is elaborated in both, US Dollars and Euros, since the company would be
based in US but the parent company is a Spanish enterprise. As mentioned in the PESTLE
analysis, the exchange rate is not stable (see appendix, exhibit 27). Thus, Touchland HQ
could consider hedging accounts receivable as Touchlands HQ invoices orders by Touchland
US in US$.

7.4.1 Cost structure

Touchland US‟s variable costs derive from product orders from the Spanish HQ. The
products are sold for $3,6 per Unit with DDP terms to Touchland US. Therefore, production
and transportation costs are both covered which simplifies the calculations for Touchland US.
Additional cost that have to be considered are fees in percentage of sales for the logistic
partner, a percentage of sales revenue for marketing and fixed operations office expenses as
well as salaries including a 10% commissions. Assets, such as a car to increase the team‟s
mobility and working tools as two computers, have been acquired as well.
The low cost structure allows Touchland US to play with its margin in different scenarios as
Touchland HQ‟s real US target price is $9 USD. Marketing research results suggest that the
high end-price could prevent the company from reaching a high turnover. Sales could be
restrained due to high value pricing. Playing with differences in pricing can give insight into
the different sales scenarios possible.

7.4.2 Sales Forecast and Financial Statements

In order disclose the possible market share and sales forecasts for Touchland US estimates on
segment size were made. As a starting point, the value market size of $400 million USD for
201525 was taken into consideration. According to a report from Transparency Market
Research, the hand-sanitizers market will expand at a 9.0% CAGR (Compound Annual
Growth Rate) during 2014 to 202026. With this information the market size in value was
determined for the forecasting period. Following, the population size of the targeted segment
and its hand-sanitizer consumption in units was calculated. Thus, the share of total market
value, that represents the targeted segment, could be defined. After calculating the segments‟
market size in value over the five year period, the volume and value share that was going to
be attained by Touchland each year from 2016 to 2021 was determined (for calculations see
appendix, exhibit 28). After reaching the unit sales forecast, the numbers were used for the
calculation of the financial statements (see appendix, exhibit 29 for details). Different
margins were applied to the product to achieve variation over the three scenarios. In the
pessimistic scenario Touchland US‟s margin is reduced from 30% to 27% and expected
market share is reduced from 3% to 2,5%. Facing the risk that the product does not sell well

25
Source: information given by Touchland
26
Source: http://globenewswire.com/news-release/2015/04/17/725574/10129440/en/Alcohol-Based-
Disinfectants-Market-is-estimated-to-reach-a-total-value-of-US-2-18-billion-by-end-of-2020-Transparency-
Market-Research.html#sthash.Zpa6l1KC.dpuf

21
under the high pricing structure, Touchland will be forced to reduce its margin. In an
optimistic scenario the margin is increased to 40% as there is less aversion to high pricing
than expected and expected market share is upgraded from 3% to 3,5%. Refer to graph 9 for
further detail.

Graph 9: Sales Forecast ($USD)

Source: created by the authors

An initial investment is needed in order to start the operation of Touchland US. The amount
varies according to the scenario, but for the analysis a focus is laid on the realistic scenario
(for further information on the scenarios see appendix, exhibits 30-32) that requires an initial
investment of $86.636,01 USD. As Touchland HQ is not equipped with the necessary funds
to finance this business, Touchland US relies on investors (risk capital enterprises) to
contribute to this project.
Examining the evolution of net income according to the respective scenarios, it is evident that
differences in income are linked to expected sales and prices, as overall expenses and assets
are the same for every scenario (see graph 10 below). Although, the net income for the
realistic scenario is positive from the first year, the monthly income statement however shows
that the first profits are made after July 2016.

22
Graph 10: Net Income Forecast ($USD)

Source: created by the authors

As this project requires a low investment while sales are relatively high. In the realistic
scenario overall profitability of the project (IRR) is 20% with a net present value of
$174708,65 USD over the five years.

7.4.3 Taxation
As Touchland US is a fully independent subsidiary it will be taxed in the US. Annual
corporate tax has to be field the 15th day of the third month after the company‟s fiscal year
closing. Federal taxes are 40%. Additionally, income can be taxed on state and local levels
with a rate from 0% to 12%, being the one for New York State a flat rate of 7,1%. The paid
income tax on state level is deductible for federal income tax purposes. In the case that
dividends are paid usually a withholding tax of 30% is charged.27 But since Spain and the US
hold a special tax treaty dividends are taxed with max 10% if the recipient holds min. 25% of
the company's shares and otherwise a maximum of 15% is charged. 28 Double taxation on
income transfers from the US to Spain are avoided by the double taxation treaty between both
states.29 Since corporate income taxes in Spain are below those in the US no additional taxes
would have to be paid in Spain.

7.5 Touchland US’s Operational Plan Timetable

The operational guidelines that Touchland will follow over the course of the start of
operations in the US are outlined in detail above. The timetable gives further information of
the placement of each activity that needs to be done over the next year (see graph 11).
27
Ernst & Young LLP (2014): “Step by step, helping you succeed in the US. The inbound guide to US
corporate tax.” Retrieved online under:
http://www.ey.com/Publication/vwLUAssets/EY_US_Inbound_brochure_en/$FILE/EY-US-Inbound-brochure-
en.pdf
28
Department of State (1991): “Income Tax Convention with Spain” Retrieved online under
ttp://www.irs.gov/pub/irs-trty/spain.pdf
29
US Department of State (1990): “Convention between The United States of America and The Kingdom of
Spain for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on
Income.” Retrieved online under:
http://photos.state.gov/libraries/spain/164311/tratados_bilaterales_2013/Taxation_TIAS_1591.pdf.

23
Graph 11: Touchland US Operating Timetable

Source: created by the authors

8. CONCLUSION
Touchland‟s internationalization through the subsidiary Touchland US is a promising
investment. A stable US economy with a growing market for hand-sanitizers offers great
potential. Results that can be achieved in the US are most likely to exceed Touchland‟s
opportunity costs of investing an equal amount into the operations in Spain. The home market
is by far not as flourishing. Even though the targeted US market segment is a niche, profitable
turnover can be generated through the high margin. Despite strong competition in the market
Touchland US will be able to differentiate itself strongly from other hand-sanitizer
companies. Touchland‟s unique value proposition of an environmental friendly and trendy
designer product creates an emotional selling proposition in a niche identified by marketing
research. Marketing strategies according to the 4E‟s will transfer the product concept into a
business operation. The unconventional approach on marketing will help Touchland US to
revolutionize the otherwise stagnated category with its design driven approach on innovation.
The relatively high value pricing was identified as a possible constraint to the business in the
US. But the forecasted financial scenarios demonstrate, an internal rate of return of 20% can
be achieved under the realistic scenario. Although, this number could be attributed to the
rather academic approach of this business plan, the expected gains from investment in
Touchland US are high. The investment sum needed is rather low compared to the revenue
that can be made even in a niche market. Even under the pessimistic scenario the business
will turn to positive income within the fifth and final year of the business plan presented here.
It can be suggested that even the IRR will turn positive if applied over a longer period than
the first five years. A positive scenario implies that potential revenues could exceed
expectations, if the value pricing should not be as much of an obstacle as anticipated.
In conclusion, it is likely that Touchland US will succeed in its endeavor to establish itself as
a reference for lifestyle and innovation in the US market.

24
REFERENCES

Boundless (2014): “The Class Structure in the U.S..” In: Boundless Sociology. Boundless, 03
Jul. 2014. Retrieved from https://www.boundless.com/sociology/textbooks/boundless-
sociology-textbook/stratification-inequality-and-social-class-in-the-u-s-9/the-class-structure-
in-the-u-s-75/the-class-structure-in-the-u-s-442-10206/

Center for Disease Control (n.d.): “Workplace Health Promotion.” Retrieved from
http://www.cdc.gov/workplacehealthpromotion/implementation/topics/immunization.html

DeNavas, Carmen/Proctor, Bernadette D. (2014). “Income and Poverty in the US: 2013.”
Retrieved from
http://www.census.gov/content/dam/Census/library/publications/2014/demo/p60-249.pdf

Department of State (1991): “Income Tax Convention with Spain.” Retrieved from
http://www.irs.gov/pub/irs-trty/spain.pdf

FDA (1994): “Tentative Final Monograph.” Retrieved from

http://www.fda.gov/OHRMS/DOCKETS/98fr/94-14503.pdf

Hofstede, Geert (n.d.): “Cultural Dimensions US.” Retrieved from http://geert-

hofstede.com/united-states.html

Mallaby, Sebastian (2012): “US labour market doesn‟t work.” Retrieved from
http://www.ft.com/intl/cms/s/0/08d1eeae-ead3-11e1-984b-
00144feab49a.html#axzz3KfnppMOi

KPMG (n.d.): “Taxes.” Retrieved from:

http://www.kpmg.com/GLOBAL/EN/SERVICES/TAX/Pages/default.aspx

KPMG (2011): “Investing in the USA.” Retrieved from

http://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/invest-in-
the-us-international.pdf

Layton, Lyndsey (2010): “FDA says studies on triclosan ,used in sanitizers and soaps,raise
concerns.” Retrieved from http://www.washingtonpost.com/wp-
dyn/content/article/2010/04/07/AR2010040704621.html

Oanda (n.d.): “Historical exchange rates.” Retrieved from

http://www.oanda.com/lang/es/currency/historical-rates/

OECD (2012): “Programme for International Student Assessment United States (2012).”
Retrieved from http://www.oecd.org/unitedstates/PISA-2012-results-US.pdf

OECD (2015): “United States Economic Forecast Summary.” Retrieved from

http://www.oecd.org/unitedstates/united-states-economic-forecast-summary.htm

Ohsonline (2010): “Report: U.S. Hand Sanitizers Market to Exceed $402M (2010, June).”
Retrieved from http://ohsonline.com/articles/2010/06/14/us-hand-sanitizers-market-will-
grasp-millions.aspx

25
PWC (2015): “Ease of Paying Taxes 2015.” Retrieved from:
http://www.pwc.com/gx/en/paying-taxes/index.jhtml

Statista (n.d.): “The Fastest growing U.S metro areas by their average annual GDP growth
rate between 1998 and 2008.” Retrieved from
http://www.statista.com/statistics/184609/average-annual-gdp-growth-rate-of-fastest-
growing-us-metro-area-economies/

The United States Conference of Mayors (2012): “US Metro Economies.” Retrieved from
http://usmayors.org/metroeconomies/0712/FullReport.pdf

US Government Availability Office (2009): “Sovereign Wealth Funds.” Retrieved from

http://www.gao.gov/products/GAO-09-608

WHO (2007): “Improved Hand Hygiene to Prevent Health Care Associated Infections.”
Retrieved from http://www.who.int/patientsafety/solutions/patientsafety/PS-Solution9.pdf

World Bank (2014): “Worldwide Governance Indicators.” Retrieved from

http://info.worldbank.org/governance/wgi/index.aspx#home

World Bank (2014): “Worldwide Govern

ance Indicators: USA Country Report.” Retrieved from
http://info.worldbank.org/governance/wgi/c228.pdf

Worldbank (2015): “Doing Business.” Retrieved from

http://www.doingbusiness.org/~/media/giawb/doing%20business/documents/profiles/country
/USA.pdf

World Freights Rates (n.d.): “Freight calculator.” Retrieved from

http://worldfreightrates.com/en/freight

26
APPENDIX

Exhibit 1: Touchland’s Products

Source: Touchland

Exhibit 2: Health awareness

Source: WHO‟s first global report on antimicrobial resistance 2014. Retrieved online from:
http://www.who.int/mediacentre/news/releases/2014/amr-report/en/

27
Exhibit 3: VRIO Analysis
Resource/ Packaging Design
Capability
Valuable The design of the products
adds a differentiation to the
product in the industry and
therefore is the best
marketable aspect of the
products. Touchland has
spent a significant amount of
time into this resource during
R&D.
X X
Rare None of the other
competitors in the industry
has a focus on design in their
packaging. Most focus on the
health and hygiene aspect of
their products. X
Imitable The design is unique but
could easily be imitated by
competitors if Touchland
does not build up a strong
brand up till that point. It
would take the competitors a
certain amount of time to
develop a new design, but it
would be no major obstacle.
X X
Organization Touchland was created upon
developing hand-sanitizers
with a design advantage.
The organization, i.e.
marketing, brand, has been
built around the product and
the design approach. The
resource should be easily
exploitable.
X X
Source: created by the authors
Product Customization
The possibility to customize
the stationary product,
allows it to either promote
the customers own brand
(corporate identification,
merchandise) or to attain
extra income by renting that
space for advertisement (i.e.
in restaurants, hotels, etc.).
There is no product known
with the same possibility to
advertise the company and
use the product as
merchandise.
X X
It would require an
adaptation of the
competitors product to make
an easy customization
feasible for them. However,
imitation is not impossible
and could be done in a
rather short period of time.
X
As an essential part of the
product, the company’s
organization is about
marketing the customization
of this attribute.
Formula
Unlike other hand-
sanitizers Touchland does
not focus on gel hand-
sanitizers but on a liquid
based on alcohol.
X
Many other products offer
a similar formula, based on
alcohol, in order to improve
hand hygiene.
The formula can easily be
replicated, if it is available
to the competitors (through
the product or inside
information).
Touchland’s focus does
not ly in the formula of the
product and the
organization is not build
around the further
development of this aspect
of the product.
X
28
Exhibit 4: Innovational Organization’s Value Chain
Contributions of design management to innovation management

Source: Acklin (2010)

“Design management is considered re‐ active, mainly managing the resources, time,
people andmoney necessary for design activities in a company, and design leadership is
considered pro‐ active to its competitive advantage and envisioning the future (Acklin
2009: 4).” Instead of an hierarchical structure imposing a strategy the design centred
approach revolves around processes. Those focus on cyclical creating new customer
experiences in order to stay in the market. Integrating the entire value chain into this
process is an important feature of a design centred organization.

Sources: Acklin, Claudia (2010): Design-Driven Innovation Process Model. In Design Management Journal,
Volume 5, Issue 1 and Acklin, Claudia (2009): “Design-Driven Innovation Process Model”, Paper for the
Design Korea 2009 International Conference, December 2009, in Incheon. Retrieved online under
http://www.academia.edu/210504/Design-Driven_Innovation_Process_Model

29
Exhibit 5: Strategy Diamond Tool

Source: created by the authors

Exhibit 6: Exporting Regions of Touchland

Source: Touchland

30
Exhibit 7: Gross Metropolitan Product of US Metro Areas

Source: U.S. Metro Economies Outlook - Gross Metropolitan Product, and Critical Role of Transportation
Infrastructure. Prepared by Global Insight and IHS for the United States Conference of Mayors and The
Council on Metro Economies and the New American City. July 2013. From:
http://usmayors.org/metroeconomies/0712/FullReport.pdf

Exhibit 8: Estimated Income per household per year US (2013)

RESIDENCE POPULATION INCOME
(in thousands) (Estimate in US$)

Inside metropolitan statistical areas 103,573 54,042

Inside principal cities 41,359 46,778

Outside principal cities 62,213 59,497

Outside metropolitan statistical areas 19,379 42,881

Source: U.S. Census Bureau 2013: Income and Poverty in the United States 2013. Current Population Reports
from:
http://www.census.gov/content/dam/Census/library/publications/2014/demo/p60-249.pdf

31
Exhibit 9: Economic Outlook US

Source: https://www.compareyourcountry.org/oecd-economic-outlook?project=oecd-economic-
outlook&page=1&cr1=oecd&cr=usa&lg=en

32
Exhibit 10: PESTLE analysis

Source: created by the authors

33
Exhibit 11: Five Forces Analysis

Source: created by the authors

34
Exhibit 12: Touchland’s Direct Competitors in the US

35
Source: created by the authors

36
Exhibit 13: Substitutes to Hand-Sanitizers, by sales in 2013

Source: http://www.statista.com/statistics/192647/leading-us-health-and-beauty-care-product-categories-in-
2013/

Exhibit 14: Stakeholder’s Analysis

Source: created by the authors

Exhibit 15: Global Start-ups in Hand Sanitization: Benchmark

Source: created by the authors

37
Exhibit 16: Scorecard Entry Model Touchland US

Source: created by the authors

38
Exhibit 17: Trademark Registry US: Touchland

Source: http://tmsearch.uspto.gov/bin/gate.exe?f=searchss&state=4803:4h8rr.1.1

Exhibit 18: Logistics calculation

Hand-sanitizer package size= 10x6X2 = 120 cm3
Packages with 8 hand-sanitizers = 8x 120 = 960 cm3 = 0.00096 m3
Standard container size ( 40 feet) = 67.7 m3
Each container approximately- 70000 packages with 8 hand-sanitizers ( 560.000 units)
Each container costs approximately- 4500$

Sources: http://www.atmgloballogistics.com/docsjpg/Documents/containerinfo.pdf,
http://worldfreightrates.com/en/freight

Exhibit 19: Logistic Partner Service Contract

Between Touchland US (hereinafter referred to as “the Seller”) whose registered office is at …… duly
represented by Mr/Ms. Andrea Lisbona in its condition of Chief Executive Officer and Barrett Distribution
centers (hereinafter referred to as “the Logistic Partner”) whose registered office is at 15 Freedom Way
Franklin, MA 02038 duly represented by Mr. Mark Gionfriddo, in its condition of Chief Executive Officer.
It is agreed as follows:

ARTICLE 1: APPOINTMENT, EXCLUSIVITY, TERRITORY AND PRODUCTS

The Seller hereby appoints the Logistic Partner to logistic partnership of the Products listed in Annex Nº 1
(hereinafter “the Products”) in the territory of United States of America except Puerto Rico (hereinafter “the
Territory”) and the Logistic Partner accepts such appointment and agrees to respect the terms and conditions

39
hereinafter set out.
The Seller shall be entitled at any time to add, replace, or delete any item of the Products, provided that it so
advises the logistic partner at least 30 days in advance.

ARTICLE 2: DURATION

This agreement shall be effective from the date of its signature and shall remain in force until 31st December
2016. It shall be automatically renewed for successive periods of one year, unless terminated by either party
by notice given in writing ensuring evidence and date or receipt.
The period of notice shall be one month for the first year following commencement of the logistic partnership,
two months for the second year, three months for the third year, and so on for the fourth and fifth year. If the
agreement has been in force for more than five years, the period of notice shall be six months.

ARTICLE 3: SELLER’S OBLIGATIONS

The Seller shall supply the Logistic Partner the Products according to its General Conditions of Distribution
(Annex Nº 2 to this Agreement)

The Seller shall supply the Logistic Partner free of charge with catalogues and technical information necessary
for the maintenance of the Products.

ARTICLE 4: LOGISTIC PARTNER’S FUNCTIONS AND OBLIGATIONS

The Logistic Partner shall distribute the Products in its own name and on its own behalf.

The Logistic Partner shall devote its best efforts for the adequate exploitation and distribution of sales of the
Products within the Territory in accordance with the Seller’s image. In particular the Logistic Partner shall:

(1) Set up and maintain an adequate organization for distribution

(2) Maintain at its own expense a stock of Products and spare parts, sufficient for the normal needs of the
Territory

ARTICLE 6: GUARANTEED MINIMUM TARGET

The parties have agreed that the logistic partner shall distribute from the Seller Products for a minimum
guaranteed amount of 350.000$ during the first year of this Agreement.

This amount shall be revised annually by the parties. If such amount is not decided upon, or if the amount that
was decided upon for the preceding year was not purchased from the Seller by the Logistic Partner, the Seller
shall be entitled by giving one month written notice, to terminate this Agreement, or to reduce the extension of
the Territory. This right must however be exercised not later than two months after the end of the preceding
annual period.

ARTICLE 7: USE OF SELLER’S TRADEMARKS AND SYMBOLS

The Logistic Partner shall distribute the Products under the Seller’s trademark.

The use by the Logistic Partner of the Seller’s trademarks, trade names or any other symbols of the Seller:

(1) shall be made only for the purpose of identifying the Products.

40
(2) shall not attribute any property rights to the Logistic Partner.
(3) shall not authorize the logistic partner to register such trademarks, trade names and symbols.
The Logistic Partner shall notify the Seller of any infringement of the Seller’s trademarks, trade names or
symbols or other industrial property rights, that comes to the logistic partner’s knowledge.

ARTICLE 8: CONFIDENTIALITY
Each party shall not divulge to any third party any information of confidential nature that has come to its
knowledge by reason of this Agreement. This clause shall remain in force even after expiry or cancellation of
said Agreement.

ARTICLE 10: EARLIER TERMINATION

Each party may terminate the present Agreement with immediate effect by written notice in the following cases:

(1) substantial breach or repeated violation by the other party case of its contractual obligations

(2) bankruptcy, liquidation or any kind of composition between debtor and creditors, that may affect any of the
parties

(3) change of control, ownership and/or management of the Logistic Partner Barrett. In particular it is
understood that the Seller may immediately terminate the Agreement from the moment when Mr. Mark
Gionfriddo shall ceases to be Chief Executive Officer of the logistic partner company

The violation of the provisions concerning non competition (article 4), guaranteed minimum target (art.6) and
confidentiality (art.9) shall be considered in principle a substantial breach of this Agreement.

ARTICLE 11: PROHIBITION OF ASSIGNMENT

The present Agreement cannot be assigned without the prior written consent of the parties.

ARTICLE 12: RETURN OF DOCUMENTS AND SAMPLES / PURCHASE OF STOCK

On the expiration or cancellation of this Agreement, the Logistic Partner shall return to the Seller any samples
and any other documents (catalogues, pamphlets, etc) supplied by the Seller which are in the Logistic
Partner’s possession.
The Seller shall be entitled to repurchase the Products that the logistic partner has in stock at the cost price of
the logistic partner.

ARTICLE 13: ARBITRATION AND APPLICABLE LAW

Any dispute arising out or in connection with the present Agreement shall be finally settled in accordance with
the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in
accordance with said Rules.

This Agreement as well as all related purchases and sales shall be governed by the laws of the Seller,
provided they do not conflict with mandatory rules of the law of the country where the Logistic Partner is
established.

ADDENDUM TO LOGISTIC PARTNER CONTRACT

GENERAL CONDITIONS OF DISTRIBUTION

41
FEE & DISTRIBUTION LIST
DDP - Port of Wilmington .......................................................................................................
KUB2Go- $7,02
The above price is DDP Seller’s price and should be the final price.
Fee for warehousing: 500 $/month
Fee for logistics: Calculated depending on the distance

GENERAL CONDITIONS OF DISTRIBUTION

The distribution of the Seller’s products is governed by these General Conditions of distribution and by the
United Nations Convention on contracts for the international distribution of goods (CISG- Vienna Convention
1980).

1. ACCEPTANCE AND EXECUTION OF ORDERS

All orders are collected by the Seller Sales Representatives, who should notify the Logistic Partner at least 7
days in advance.
The Seller shall use its best efforts to execute any orders within the periods mentioned on such orders.
However the Seller shall not be liable for any delay in their execution, the dates given for DDP availability being
only an indication.
2. PAYMENT TERMS
Unless otherwise agreed, payment of the logistics of Products supplied by the Seller shall be made by
electronic transfer of funds (swift transfer) to designated bank account of Seller prior to consignment.
3. RETENTION OF TITLE
The Products delivered remains the property of the Seller until arrival to the final customer.
4. GUARANTEE OF PRODUCTS
The Products are guaranteed for a period of one year, from the date of shipment.

Source: created by the authors

42
Exhibit 20: Focus Group
The focus group meeting was organized at the UPF Barcelona School of Management
with US citizens currently studying in Barcelona. It lasted around forty minutes and was
moderated by one of the authors. As a conversation starter a general discussion on
hygiene and its importance was initiated. Overall dynamics between participants were
smooth and everyone had an opportunity to speak and express their opinion.

Summary of results:
● Americans are highly concerned with hygiene (laundry, brushing teeths, deodorant,
etc.) and would consider their own hygiene need level higher than on European
average.
● Several products are being used for hand hygiene (lotion, wipes, soap, traveling
hand-sanitizers).
● Hand-sanitizers are a quick way to wash your hands when no soap and water are
available. Availability of washrooms in the US was perceived as widely covered
unlike in Spain.
● Partially, the participants were not confident about hand-sanitizer effectiveness.
● Usage of hand-sanitizers was perceived highest by one participant among moms
who are highly concerned about their kids safety. Hand-sanitizers are considered a
very convenient tool for them.
● For man the alcohol within the hand-sanitizer helps breaking out the wax/hair spray
after application.
After playing the lifestyle video of Touchland (https://youtu.be/se8_N-Oexqc: GoPro
camera that follows people’s hands, experiencing exciting situations that require hygiene
protection).
● Common agreement under the participants, that they would not use hand-sanitizers
while sporting (which was the major activity in the video)..
● Maximum price they would be willing to pay was 5$USD for five hand-sanitizers.
● The design aspect was not as important to them.
● Hand-sanitizers were considered an Impulse purchase rather than a on purpose
purchase.
● Additional features of hand-sanitizers were brought up by the participants: lanyard,
multi tool incl. hair gel, promotion together with other products.
Source: created and executed by the authors

43
Exhibit 21: Online Survey
The online survey (http://goo.gl/forms/PpMpa8Cg5P) was done through a Google Drive tool
that allows anyone to create a survey for free without a limit on the number of questions.
The questions were derived from the focus group’s results and insights. Touchland’s
survey was divided in five parts:
1. Personal information → Segmentation questions: Gender, age, time living in the US
etc.
2. Hygiene → Importance of hygiene and specifically hand hygiene was investigated,
as well as knowledge on the existence of hand-sanitizers in general.
3. Hand-sanitizers → Questions on information about hand-sanitizers preferences,
frequency of use, effectiveness, occasions for using it, perception as substitute for
traditional water and soap hand washing.
4. Pricing → Average price willing to pay for a hand-sanitizer, and questions about
preferred or desired attributes and their importance. Connection of the attributes
with premium price increase.
5. Lifestyle → Relevance of trends and design was inquired.

The online survey was online for three weeks at the end of April/beginning of May 2015. In total 51 persons
answered, of which four indicated that they had never lived in the US and were therefore excluded from the
analysis. From the remaining sample 29 people were between 20-30 years old and 11 over 50 years old, 30
were female and 19 male. 29 people lived in large cities with a population above 1.000.000, 12 in small cities
with a population above 100.000 people and 8 in rural areas. As the survey does not give a representative
sample of the population the results can only be counted as indicators for trends.

Summary of results:
● 58% of respondents were from large cities (1-5M people) and 93% of them said
personal hygiene was very important for them.
● Out of the 93% of large city inhabitants that care very much about personal hygiene
a 100% said they wash their hands every time after the touch a dirty item.
● 75% of respondents don’t believe that hand-sanitizers can be a substitute for
traditional handwashing.
● 42% of respondents partially rely on antibacterial effectiveness of hand-sanitizers
and 36% do rely on its effectiveness.
● 7% of respondents said they will be willing to pay between 3-6$USD per bottle
(50ml) because design is important and 63% will be willing to pay between 1-
3$USD per bottle (50ml) even if for 70% of those 63% design is important.
● 56% of respondents said they would not pay more for special attributes such as
design and scents and 23% said they only would if it was really special.
● 58% of respondents like to follow trends or be trend-setters.
● 19% of respondents considered design is really important and 63% believe is
important but not essential.
Source: created and executed by the authors

44
Exhibit 22: Evolution of the 4P’s

The 4P’s of marketing, also known as the producers-oriented model, have been used by
marketers since they were first created by Jerome McCarthy since 1960, specially after
their debut on the Philip Kotler book called “Marketing Principles” in 1967 which became
the sacred guidelines marketing professionals should live by. The focus of this structure is
based on the marketing mix essentials which are: Product, Price, Placement and
Promotion. Throughout the decades this line of thought has worked wonderfully for any
type product or services company that cared about investing in marketing to drive sales
growth in a very straightforward way. However, since a few years ago global leading
influencers of the field, such as Ogilvy & Mather and several Harvard Business Review
collaborators, have outlined that the 4P’s are outdated in today’s world. Although they
were the perfect guidance for product managers of the past, today they lack impact. This
has been mainly brought by the fact of the dramatic shift in power from the companies to
the people. Today with all the technological advances and innovations, audiences are able
to know everything within the range of their hand with a smartphone or any internet-
connected device, this means consumers get to see all a company or brand is and not just
what they want them to perceive.
In consequence of such consumer empowerment, brands have rethinked their marketing
strategies and through this changes Ogilvy & Mather was provided with the needed
information to define the new-ruling marketing mix framework called 4E’s.
Essentially what the 4E’s try to tackle is the issue of intense competition which makes
product’s differentiation last little, the almost limitless access to information which makes
consumers highly demanding and the overwhelming segmentation media has suffered with
the digital landscape opening which makes audiences spread among a high number of
outlets. Following a concise explanation on how this 4E’s emerge from the 4P’s and why
this would fit best for Touchland’s B2C marketing approach in the US for the KUB2Go.
1. From Product to Experience this states that potential consumers are not only
looking for a practical and functional solution for satisfying a need, they are looking
for a holistic experience throughout their whole purchasing journey. This means
having a friendly and relevant website, being in every social media that your target
uses with top of the line content and continuing the excellence in stores and after
purchasing.
2. From Place to Everyplace meaning that today brands should not be looking to
interrupt consumers while watching TV, reading a magazine or visiting a retail
store. Today brands need to intercept the consumer where they are more willing to
engage and this could be anyplace or everyplace. Social media and e-commerce
have marked a great deal where consumers buy.
3. From Price to Exchange enhancing the importance of the value the good or
service represents instead of costs, enables consumers to pay attention on what
the brand is saying, engage with the purpose and permit themselves the purchase.
4. From Promotion to Evangelism this refers to the fact that emphasizing on an
attribute or benefit to promote a product is not longer enough, today consumers will
engage in the way that makes a company successful only if they relate with the
purpose of the brand. It is the theory of the “Golden Circle” by Simon Sinek, a
brand’s message needs to be built from the inside out: first state brand’s purpose,
then explain how the brand will achieve this and finally say with what product or
service it will happen. This simple structure will create a base of brand advocates
that will spread the word throughout the community they are in.
Source: http://www.ogilvy.com/On-Our-Minds/Articles/the_4E_-are_in.aspx

45
Exhibit 23: Design and Innovation as Positioning tools
Consumer Response to Product Design

Product design influences cognitive behaviours of consumers towards the final product
including its recognitions and associations. Further, the design helps to categorize the
Product according to its first hand impression on similarity to other products of the
category. By changing the hand-sanitizers appearance Touchland could disconnect the
product from the mere healthcare oriented category into a more lifestyle oriented direction.
This approach has worked well in other categories for Nespresso and Apple.

Source: Bloch, Peter H.: Seeking the Ideal Form: Product Design and Consumer Response. In:
Journal of Marketing, Vol. 59, No. 3 (Jul., 1995), pp. 16-29

Exhibit 24: Cost Structure/Compensation Method Coordinator

Labour market comparison: Marketing Manager US

Annual Average: 30.000$- 36.000$; Median: 33.000€

SALARY INCENTIVES BENEFITS

YEAR 1: 35.000$ Objective based variable pay According to Spanish law:

FOLLOWING YEARS. increase of Gain Sharing over total US profits health insurance
base pay according to merit (2%). retirement fund
Source: created by the authors with information from
http://www.payscale.com/research/US/Job=Marketing_Manager/Salary

46
Exhibit 25: Hofstede’s Cultural Distance Model Spain/USA

Source: created by the authors with information from http://geert-hofstede.com/spain.html

Exhibit 26: Cost Structure/Compensation Sales Representative

Labour market comparison: Outside Sales Representative

Annual Average Spain: $30,204 - $87,329; Median: $45.750

SALARY INCENTIVES BENEFITS

YEAR 1: $30.000 Incentive pay for individual sales/ According to US law

new customers

FOLLOWING YEARS. promotion Gain Sharing quarterly over total

possibilities, if the market share US profits (2%).
grows
Source: created by the authors with information from
http://www.payscale.com/research/US/Job=Inside_Sales_Representative/Salary

47
Exhibit 27: Historic Exchange Rate Level

Source: http://www.xe.com/currencycharts/?from=USD&to=EUR&view=5Y

48
Exhibit 28: Sales Forecast Variables and Premises

Source: created by the authors

49
Exhibit 29: Input Sheet Variable for Realistic Scenario

Source: created by the authors

50
Exhibit 30: REALISTIC SCENARIO STATEMENTS

Balance Sheet

51
Income Statement

52
53
Cash Flow Statement

54
Exhibit 31: OPTIMISTIC SCENARIO STATEMENTS

Balance Sheet

55
Income Statement

56
57
Cash Flow Statement

58
Exhibit 32: PESSIMISTIC SCENARIO

Balance Sheet

59
Income Statement

60
61
Cash Flow Statement

62